Information is a valuable resource when you’re trying to start a business. The more information you have, the better your decisions will be, and the more successful your business will be when it opens. Market research is the process of acquiring that information.
In this article, we’ll be looking at a few different topics related to market research, such as:
- What is market research?
- Why is market research important?
- Market research methods
What is market research?
Market research is the process of collecting data on the environment within which you’ll be starting a business. This research should cover everything related to your business — from your potential customers and potential competitors to the state of the industry your business will operate in.
There’s also a considerable number of methods you can use to complete market research. The method you choose will differ depending on what’s most suitable for your business and what you can afford. There are many resources available for free, but it might be good to prepare to spend some money on obtaining good quality market research, since it can significantly impact your business decisions.
Why is market research important?
You should complete market research before you even begin writing a business plan. This is because you might need to adapt your plan depending on the information you uncover during your research.
For instance, you might find out that most of your potential customers use their phones to shop online. Naturally, this information will impact your marketing strategy, as you’ll need to focus your advertising on channels that people will see while using smartphones.
Market research can also help you decide on what product or service your business will offer. Thorough market research will provide you with information on what products are currently available in the space and what customers are looking for. You may find out that your original product idea is very common or isn’t something customers are looking for — in this case, you may want to make some significant changes to your idea.
Market research is essential because it can entirely change the direction of your business, and you might end up starting a very different company than you initially expected. Of course, market research isn’t just important when you’re starting a business. You should perform market research whenever you’re doing something new with your business, whether that means offering a new service or releasing a new product.
Market research methods
Create a customer profile
One of the easiest methods for market research is creating a customer profile. All this method requires is that you have a very clear idea of the service your business provides.
Once you have a clear idea of this, think of the kind of person interested in that business. Then, ask yourself a series of questions about the person, such as:
- How old are they?
- Are they male or female?
- Where do they live?
- Do they prefer to shop online or in-store?
- What companies do they shop with?
- What kind of income do they have?
- Do they use social media?
- If so, what platforms do they use?
- How do they find out about new companies?
Once you’ve answered these questions, write them up as a customer profile. This profile gives you a picture of what’s known as your target market. A target market is the kind of consumer your product or service has the potential to be popular with. If you know your target market, you can perform more specific market research to determine what those consumers want from their products.
You can also try sending surveys to potential customers once you have identified a target market. These surveys should ask people what they think about your product, what they would spend on it, and any suggestions they might have.
If you’re performing market research by analysing your competitors, try to avoid copying too much of their business plan. While it’s wise to adopt some of the ways your competitors do things — you’ll be operating in the same sector, after all — you want to be different enough to stand out.
If you’re a small business, it’s best to focus your competitive analysis at a local level. It’s not a great use of your time to research similar companies in another country when you have more direct competitors in the same town or city as you. The exception is when you’re an online business. In this case, you would be best-suited to researching competitors that are a similar size to you or that share a specific target market.
Use existing data
Market research data exists in great quantities on the internet, and you can use this instead of having to find it yourself.
Businesses like Mintel allow you to download market research reports for free. Reports are organised by year and by industry, so you can find the most suitable information for your business. Of course, you’ll still need to read and analyse the reports yourself, but not having to do the initial research still speeds things up considerably.
There are also companies, like Kantar and Gartner, that perform analysis on your behalf and provide you with the results. This can be expensive, but you could purchase individual reports from IBISWorld as a slightly cheaper alternative. The reports from these companies are more relevant and of a higher quality than the free options, but you will pay more for them.
Give your business a strong start with Countingup
Once you’ve completed your market research, you’ll nearly be ready to set up your business. There are a few final things you’ll still need to consider, though, and how you’re going to manage your finances is one of them. Financial management can be stressful and time-consuming when you’re self-employed, so consider using the Countingup app to make your financial admin easier.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!
Find out more here.